Corporate Scandals as Punctuating Events That Change Human Resource Roles

Abstract

Corporate scandals disrupt the landscape for organizational leaders and employees, providing a burning platform that creates new momentum for change. Here, we explore the implications for the human resources (HR) function as organization-level responses to scandals cannot occur without individual-level changes in employee behaviors—the domain of HR. We apply event systems theorizing to uncover the nature of the scandals through notions of strength, space, and time to better understand the range of possible outcomes for HR function roles. Empirical data are presented from in-depth qualitative case studies carried out in five large multinational corporations in the pharmaceutical, chemical, and financial services industries. Subsequently, we uncover how organization-level scandals punctuate the equilibrium of organizational operations, facilitating a recalibration of the balance between the potentially competing institutional logics of moral legitimacy and business priorities. We furthermore challenge universal HR role typology theorizing regarding the direct influence of external stakeholders on the role that HR can adopt inside organizations. Overall, we demonstrate that organizational responses to corporate scandals require individual-level and collective employee behavior change, placing the HR function at the intersection of managing risk, compliance, and legal requirements.